With data showing around 1,000 people moving to Florida every day, the construction industry is seeing high demand across the demand.
But with that demand comes challenges. According to a construction industry expert, one of those challenges in Florida is frivolous lawsuits.
The Florida Homes Builders Association (FHBA) stressed these types of lawsuits are putting many contractors and subcontractors out of business.
Many of these lawsuits involve alleged building defects. Since 2003, the Legislature has addressed this issue, requiring that the first step to resolve a building defect complaint be between the contractor and the owner outside the courtroom in a “558” process. This state statute mandates that before you go to court and to try and sue a builder for a defect in the home, you must tell the builder what the problem is, give them a chance to fix it or if you don’t want them to fix it, pay the money to hire someone to fix it.
The FHBA’s leadership insists the process has worked until recently.
“The process…worked until the trial lawyers got involved,” said FHBA CEO Rusty Payton. “Lately, what we’re finding is the trial bar coming in and finding ways to demand huge settlements, settlements coming out of insurance claims – and frankly, the properties aren’t getting fixed.”
FHBA also pointed to another problem facing the industry as subcontractors, who aren’t targeted by the “558” claims, are also being dragged into frivolous lawsuits. When a contractor receives an overly broad claim, the contractor has to bring in every subcontractor who worked in the immediate area of the home. The end result is that contractors and subcontractors wind up having to turn these claims over to their insurance carriers which the FHBA claims is an unnecessary increased cost of doing business. This is causing some small businesses to close.
“We have opportunistic lawyers, seeking settlements rather than resolutions to actually fix the defects. They have exploited the law by making disingenuous and overly broad ‘558′ claims,” said Payton.
The homebuilder’s association is currently seeking a fix in Tallahassee, asking the Legislature to limit civil actions to “material violations” – those that exist in a completed building, structure, or facility that could result in either harm to a person or significant damage to the building.
“This would be one way to reduce the volume of frivolous lawsuits that are sinking small businesses in Florida,” the FHBA maintains.
Reach Ed Dean at firstname.lastname@example.org.